Xbox product planning boss Albert Penello tells us all about the evolution of Xbox, and how MS wasn't even thinking about Xbox One until late 2010

When it comes to the Xbox business, Albert Penello has seen it all. Following six years in product marketing at Electronic Arts, Penello joined Microsoft's (at the time) new Xbox division in 2000, helping with marketing and product planning on the very first Xbox as well as newer iterations and critically important accessories like the Kinect (which will now be a standard for every Xbox One). Penello, therefore, has a certain perspective on the continual evolution of the Xbox platform that others simply don't have.

Following the Xbox One unveiling event this week, GamesIndustry International sat down with Penello at the Redmond campus to take a deep dive into the mindset Microsoft had going into the development of Xbox One. We were surprised to hear that Microsoft really wasn't even thinking about a successor to the Xbox 360 until five years into the system's lifecycle (quite unusual in a console business), and Penello explained that Microsoft's engineers and designers were truly looking at the Xbox One as a fresh slate. How could Microsoft continue to innovate and grab new consumers while also pleasing its existing audience? How would designers know how much of the Microsoft imprint to include in the design of the system? These questions and more are addressed in this interesting behind-the-scenes look at Microsoft's product planning.

The way I describe it is, I am like the Rosetta Stone between the developers and the customers and marketing team. Think about my team as trying to put all the pieces together with different features, trying to be out there early in the incubation phases of the project trying to put it all together. Who's the customer? What's the value proposition? What features are going to resonate?

Q:In terms of Xbox One, what is your role, then?

I was the planner. I was probably one of the 12 people in the very beginning, when we decided to do a next-gen console. When we finally said, "Okay, it's time," I was one of the people that got everybody together. "Okay, now we have to start writing stuff down. What are we going to do? What do we want this to be? What do we think the future is? Who's the customer?" Just got a lot of people together and kicked the project off.

"In every generation, we've brought what I've considered...the right amount of 'Microsoft' in. That meant, in the first console, that there was no Microsoft"

Q:When was that, about?

I'd say it was probably the end of 2010, early 2011, when we really started getting serious.

Q:So it's been that recent? I'd assumed that you guys knew you'd be doing another console before that.

It's funny -- we all reminisced about this a little bit. We've been talking about it for a long time. It's never something where you just say, "Okay, we're done." It's always a question of, "What's the next thing we want to do? Can we do that on the box we have?" Kinect was one thing. It turned out that we could do it on the box we've got. NXE? Can we do it on the box we've got? Yes. Then there was a point where we started seeing and using the product and saying, "You know, we can't do HDMI passthrough on this box. We don't have the tech. We want to be more instant. We want to task-switch between gaming and entertainment stuff faster. We can't do that with the technology we've got." So there was a point where we just said, "Yeah, we're going to need to build a new box."

Q:It's interesting that you didn't really start working on Xbox One in earnest until the 360 was, what, five years old? Traditionally console cycles have been about five years. There's always this underlying assumption from gamers that as soon as you buy a system, the next one is already in the works in a laboratory somewhere. That's not the case with this?

No, it wasn't. It wasn't at all. First off, the 360 generation, the gen seven of consoles, was such a significant leap forward in terms of online, the capabilities, the technology. I know the PC has advanced much more in the last couple of years, but I'm not looking at games right now and saying, "Oh my God, these things are eye-meltingly bad." It's hard to go back and look at an original Xbox game or a PS2 game. But you look at an early 360 game and one of the ones today, it looks like it's come a long way. Plus, in the last generation of consoles, you didn't have things like NXE. If you think about the 360 S today, with the dash we have today, that's so far separated from the box that we launched in 2005.

Q:They showed a slide this morning in the briefing...

With the blades, yeah.

Q:I had forgotten how chunky and childish those were.

It almost feels like a different generation of consoles in some ways.

Q:By comparison, the current interface and the one going forward for Xbox One seem a lot more sleek. I don't know how much involvement you had with that and the direction that's gone, but what's your take on that?

In every generation, we've brought what I've considered - because I've been around since before we launched the first one - the right amount of "Microsoft" in. That meant, in the first console, that there was no Microsoft. [laughs] We needed to prove it out. With 360 we brought a little more in. We started using more of the online capabilities, Media Center, the streaming to a Windows PC.

This time, the world that we live in, these types of devices have to talk to each other better. The experiences have to be more consistent. I can't learn a new UI on every device. So you've kind of seen the modern UI in Windows 8, the Windows Phone, and us start to converge. Someone who's familiar with one can use the other. I think that's just a reflection of [how] we wanted this thing to be fast. We wanted it to be instant. We wanted it to look modern. We wanted it to look familiar.

Q:It definitely does have a sort of consistency with Windows 8, with Windows Phone. You can tell they're all part of the same family. But with that in mind, I feel like what's under the hood of Xbox One is actually very similar to the computer I use. Eight-core processor, 8 gigabytes of RAM, 500 gigabyte hard drive, and so on. How do you create a differentiation between this as a separate stand-alone platform versus a Windows PC when they have so much DNA in common and even the front end is so similar?

This is one of the more interesting conversations you have around the architecture, because it's so easy to see it get reported that because we're sharing similar components with other devices, that we are somehow the same device. I don't know if you got a chance to sit in the architecture panel, but there is a lot of work that we put into those things to make sure that every component... I mean, there is a reason you can't go to your local electronics store, put all those pieces in a box, and expect it to perform well. So take that to the nth degree, where these guys are making specific requests at the engineering level to take advantage of the different power states we want, plus the performance we want, plus the size requirements that we have. So there's plenty of differentiation in our box, even if we're using partners and technologies that are similar or shared with other types of devices.

And then we talk a lot about the architecture, the three operating systems in one, which is about saying, "Hey, on one hand we need to provide that game console-like experience, where the game developers can get to the core of the operating system, can write games that can go right to the metal and so on, and at the same time, how do we think about this developer problem between Windows, Surface, Phone, and start eliminating…" There's no reason that has to be different. There's no reason, when I go create a web-based app, that it should have to be different on Xbox One than on a Surface. There's the part of the architecture that's based on the Windows kernel that makes that easier. There is a lot to the box that is going to differentiate us from a standard machine. From the hardware that we built to the way we thought about software.

Q:So even though the technology is similar, it's a more specific machine, more focused.

It's always hard to draw analogies with this. A lot of people like to use the car analogy...

"When we say we're going to require the Internet for Xbox One, which gets of course misinterpreted and blown out of proportion into something that it's not, what we're trying to say is that we need every developer to be able to rely on the Internet connection and know that it's there."

Q:Let's do something different, then. What if a Windows PC is a Swiss army knife? You can do everything with it, but it's kind of clunky. What does that make the Xbox One?

That's a good analogy. If the Windows PC is a Swiss army knife... I wouldn't call us a razor blade, because we're not a single-function machine, but at the same time, we don't have to do everything that a Windows PC has to do. So we've shed a lot of that. That's a great one. I wish I had a quip for that. I'll have to think about that.

I think what I would say is, there are a lot of different ways that you can construct components to arrive at performance. Our guys have gone through, and the hardware and software architects have worked so closely, to make sure that every component in the box is designed to deliver... Just to get to instant, right, when you're talking about the instant switching between media, entertainment, and games, requires a lot of effort, between both hardware and software.

Q:What's the ultimate aspiration behind Xbox One? Where do you see the system going? By comparison, when I look at PlayStation 4... I kind of see them eventually moving away from hardware and just creating PlayStation as a service where you play games. I don't feel like that's necessarily the case here, though. When you look at the distant future, what is the Xbox One's place?

I think what we're trying to do is... I think, as a company, a lot of people are fighting the battle for the living room. There's two ways I think about this. The first is, as a company, we have a lot of great assets that put us in a very unique position. Some competitors don't have the gaming that we have. Some competitors don't have the music and video services that we have. Some don't have the desktop component or the service backend with the cloud that we have. We have all of these things that we can bring to bear and bring the right parts of Microsoft together to do this. So I think we're in a unique position to take advantage of that.

The second is that we really started simply trying to solve a problem that we all have. That was, we all use the product. We all realize that we don't just sit and use the TV and just linearly watch TV anymore. You want to switch between your social network, your tablet or your phone, your game, and then your TV watching, which could be a streaming service or could be disc-based. It could be live. It could be on some sort of DVR. Even today, if you use your Xbox 360, you still have to make a conscious decision between Netflix, gaming, and then whatever your set-top box is.

Just as users of the product, we said, "We can make this better. There's things we can do. Don't you want to be able to watch your favorite Game of Thrones and get a gaming toast while you're doing that and not have to make a decision about that?" I do. I don't want to have to pause my game, exit out to the main menu, start up a Netflix session. I want to be able to go through Netflix and gaming and TV just like that. That's really the problem we were trying to solve. Then we realized, "You know what? I think we have all the right assets we need to make that happen."

Q:Something I find interesting is the concept of the evolving console-that over time, the system itself will become more powerful by offloading computation into the cloud. What are the logistics and challenges with that?

The first is, where is the computation set? We're working with the rest of Microsoft to use the computational power of Azure and the cloud that we have there. So that's the first problem. Where is all the computing going to come from?

The second problem is, there's always an interesting decision between, "Is this something that we add on?" or "Is this something that we say is a part of the system that we have?" We took a lot of stick in the 360 generation because the hard drive was an accessory, which means that games developers can't count on it. We take a lot of stick about Kinect. People haven't experienced Kinect, and we've never quite realized the full potential of Kinect because it's an accessory. So Game Developer A chooses not to do things with it.

When we say we're going to require the Internet for Xbox One, which gets of course misinterpreted and blown out of proportion into something that it's not, what we're trying to say is that we need every developer to be able to rely on the Internet connection and know that it's there. The minute that you have those two parts of the equation, we're going to open up to all new classes of games and all new kinds of experiences, because now every single developer knows that I'm going to have an Internet connection, I'm going to have a hard drive, I'm going to have Kinect. I'm going to have computing in the cloud that Microsoft is providing. Let's try and make new things. Let's try and do something different.

The new Kinect, included with Xbox One

Q:The flip side of the cloud-network question is that... You and Sony are both launching these cloud-enabled consoles around the same time. All of sudden there will be millions of new devices like this on the market, which is going to put a strain on the infrastructure, I think, in a way that's never been tested before. It seems like you can only test the cloud concept to a certain degree in beta, because the whole concept is about it being huge. I'm curious to hear your take on this. What happens if it turns out that the US network infrastructure just isn't up to speed? What happens to the system then?

That's a great question. There are a couple of ways to parse it out. I think part of it is, we're just launching. Just like Xbox Live. These are the same questions I remember answering about why we put a broadband Ethernet connection in the back of the Xbox, back when modems were still the predominant force for connectivity. We said, "We're going to make a bet on the future. We know this is going to get better over time." We've observed it. We know that network connectivity and network infrastructure is going to get better over time. The way it's going to be taken advantage of at launch, and the way it's going to be taken advantage of 10 years from now, will be totally different. That is the only true statement.

We have a good sense of what kind of levels of bandwidth get used. You can do HD streaming of Netflix. I think in the beginning, people are going to dip their toes. They're going to experiment with that online experience. Then, over time, just like multiplayer gaming today, you've got dedicated servers. You've got different people with different levels of connectivity getting slightly different online experiences. All that stuff is going to grow over time.

Q:The fiber that's out there these days, it's a decentralized network. Different people and different corporations have different stakes in it. The government and cable providers and ISPs... Do you foresee Microsoft having to step in at some point and say, "Let's bring up the quality. Let's build on this"?

I don't think so. I think customer demand will solve this problem. If there's a strong desire for that, if there's a strong desire for more connectivity, it's going to happen. If people are willing to pay for it... I pay a lot more for my Internet than most people do, because I want more from my Internet. I think that the confusion that people have is that they believe that somehow, all of a sudden, their bandwidth caps or something are just going to go through the roof, when in fact that's not true. It's much simpler than that. We just need to be able to rely on that Internet connectivity for updates.

"I remember when we sat down in the room and said we were going to do this. It was, 'Okay, guys...What are the things we've always wanted?' You literally start with that blank canvas of all the things I wish I could do"

You're still going to take updates. You took updates before. You're going to take them in Xbox One. The difference is, if you opt in for auto-updates, it just means you don't have to wait. You play multiplayer games today. You use Netflix today. There will be games. There will be single-player games that have an online-required component to them. Some kind of new type of MMO will be created and you'll know. You'll say, "Okay, I'm going to choose this experience and I'll know how much bandwidth I'm going to use." It's not like you're going to plug it in and all of a sudden we're just streaming every ounce of data out of your internet connection.

Q:With such a heavy emphasis on Internet and the fact that the system has to phone home to authenticate a game when you first play it, why include a Blu-ray drive? Why not go all-in on digital distribution?

You actually answered the question with your previous question. You're talking about huge games, first of all. Well, really there are two reasons.

The first is, if you want to be an all-in-one entertainment device, you need to support the high-definition movie format. We know people want it. I got quoted as saying, many years ago, that we would deliver it at some point, and we have. Let's just be honest. You're going to want to watch Blu-ray movies, because they make them, and so we need to provide that.

The second thing is that there are still bandwidth caps. There are still download speeds that could make these huge game downloads somewhat prohibitive. So yeah, if you're a guy that's got unlimited data or something really fast and you want to download everything, that's great. But you still need to provide the physical media. Installation is going to be so much faster for many people than the Internet requirement.

Q:Back to the bigger picture of the discussion, why the name? Why "Xbox One"?

It tells a very simple story. It transmits, I think, our intention around the console, which is that there is just one device that you need. I'll be honest. For the gaming guys around here, for guys like you and I, we have to get... I had to get over that logic hump in my mind, because when I first heard it referred to that way, I had to snap beyond the fact that the "Xbox one" device was like 12 years ago. And by the way, I think we sold more 360s last year, probably, than we sold the original Xbox console. Once you get past that logic leap, I think the name is awesome. It's just very simple. It's very memorable. It gets people out of this weird sequel kind of mentality of naming. It's one device. It's got everything you need. Simple.

Q:In making the third iteration of the Xbox, Major Nelson mentioned something today about having a blank slate. To what degree is that true? How much of the Xbox legacy did you feel you were beholden to carrying through? What parts of the Xbox brand were brought into Xbox One?

That's kind of a very interesting and philosophical question, having been in the room... A lot of the guys who were working on Xbox One were also working on the original Xbox, myself included. A lot of the original team members have been around for a long time. I think there's an inherent set of characteristics and beliefs that's just carried through Xbox. It's carried through us, because we've been working on it for so long.

Really, I remember when we sat down in the room and said we were going to do this. I was there. It was, "Okay, guys, what do we want? We have a chance. What are the things we've always wanted?" You literally start with that blank canvas of all the things I wish I could do. That's what you have.

We've learned. We learned through the first one. We've learned through doing the Xbox S console. There truly was a blank slate from that perspective. And then you go back and you have to ask yourself certain other questions. Do I want my achievements and gamerscore to come over? Is there a benefit to changing that? Unless it was significant, no. Backward compatibility ends up being one of the things that's really tough. To deliver the performance that we needed, we had to switch architectures, and that was just going to make backward compatibility impossible. Not because we didn't have that on the list of things that we would have liked to carry over. Without a doubt, the conceiving of this product was truly a blank slate. When you start to fill in the blanks, that's when you start asking yourself the questions about where are the right places to carry things over.

Q:The backwards compatibility question is interesting. The PS4 theoretically has backwards compatibility in the concept of streaming through Gaikai. It's not actual backwards compatibility, but you will be able to play older games on the system at some point. Will you be offering any similar solution? Do people need to hang on to their 360s if they want to play Halo 4?

I would say, hang on to your 360. Certainly we're a cloud-powered box and... What that means can be implemented in a ton of different ways. We'll see whether this cloud streaming gaming thing actually works. But I would say, back-compat is the most important in the early years of the life cycle. If we ever did something like that, it's not going to be in the early years of the life cycle.

--

Jeremy Parish is Games Editor at USgamer. USgamer is an upcoming consumer website published by Gamer Network and launching in early June, and will be located at http://www.usgamer.net.

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That Xbone Betamax will have a rough E3 - especially as the new PC graphic cards make their announcement next month! Wonder what the fall-out will be for the Redmond clique if the system gains further bad reactions - that was an expensive launch to get so wrong! Least this may give Nintendo some breathing space to restructure their re-brand?

When we say we're going to require the Internet for Xbox One, which gets of course misinterpreted and blown out of proportion into something that it's not, what we're trying to say is that we need every developer to be able to rely on the Internet connection and know that it's there.

Calling BS on this stance right here -- its a flawed attempt at justifying DRM. Requiring the Internet is really not the same thing as making the hard drive standard, or making the Kinect standard issue. Developers having the assurance of a Kinect and a 500GB hard drive in every Xbox One absolutely offers a better base to leverage the unique opportunities from those components than when they were optional accessories; but both of those are optimal, standardised pieces of hardware with a consistent baseline performance across all users.

An end user's Internet connection however, is not even a remotely consistent factor. From what we know about the Xbox One's Internet requirements, at minimum, it should only need to be able to connect to Xbox Live to sign in, authenticate games, download patches and updates, and whatever else the console needs to phone home to stay happy. These are all things that can be done on any (non-firewalled) broadband connection, from 4Mbps through to Infinity.

So developers won't be able to implement fanciful cloud services in their game with a guarantee that it will function for all Xbox One players, because even though every user now forcibly has Internet connectivity, many still aren't going to have enough bandwidth, stable enough connectivity, or low enough latency for the kind of use cases they're crowing about.

No, the reality is that the same result could be accomplished by just permitting individual games to depend online access, at a publisher's discretion, and slapping "THIS GAME REQUIRES INTERNET" on the box. It's not a valid reason for saddling all users with a standard requirement that deprives them of an option they used to have. It's just DRM.